Just off the coast of Miami Beach, on the ultra-exclusive Fisher Island, there is one crane on one construction site. This is the last plot of land available for development and an unlikely bet on luxury real estate when the housing market appears to be in freefall.
Jorge Perez, also known as the “king of Miami condos,” and the Related Group behind the 10-story, 50-unit project boasting a sell-out price of $1.2 billion. They paid $122.6 million for the land, above market.
Units start at $15 million. The project includes a $90 million, 15,000-square-foot penthouse and a $55 million ground-floor villa with a half-acre backyard. The building also has its own slip for mega yachts. Sales just started last month.
“Almost 30% of the units,” Perez said. “The contract has gone out for more than $300 million, and we haven’t done any marketing. But, if the market slows down a bit, we’re in a lucky position.”
Buyers must put down a 50% non-refundable deposit for pre-construction sales.
Perez said early buyers are from Brazil, New York, Canada, Mexico and Israel. He said he’s seeing more domestic interest than ever, as Miami has traditionally been a haven for foreign investors. That seems to be boasting all over the city.
A view from South Florida
“Miami is an internationally focused market – 80-90% international – but it stopped during the pandemic,” said Danny Hertzberg, a luxury real estate agent with Coldwell Banker and Jills Zeder Group. “We will continue to get this domestic demand for tax reasons, but at some point political instability or a weaker dollar will pull it back. [international] people.”
Miami has been an outlier in the recent decline in home sales and prices, with prices still quite strong in the city. The high end, however, is not as tough. Pending home sales above $5 million fell 89% in December last year, according to Miller Samuel, a real estate appraisal firm.
“But the one thing to remember about Miami is that inventory is down 60% since pre-pandemic, so what’s different is that inventory is very limited,” said Jonathan Miller, the company’s CEO. “That throws out a lot of conventional wisdom about pricing.”
Miller added that the Fisher Island project, “may not sell in five minutes but it can’t sell in this market.”
The property and location are unique. Fisher Island is a 216-hectare, ultra-exclusive community, only accessible by ferry or yacht and only open to residents, guests and guests of small luxury hotels there. The last condominium sold on the island was last year for $40 million, according to a representative of the Related Group.
Hertzberg said Perez’s new building “checks a lot of boxes” for wealthy buyers who have a new mentality since the start of the pandemic.
“They want facilities, privacy and security. That’s the main factor there. They want convenience. There’s a private school there. Your own restaurant, your own grocery store. A private beach,” said Herzberg.
He also notes that fast admission to the golf club for residents is a big draw. He said there is a five- to seven-year waiting list in greater Miami to join a golf club.
“I’m sure they will sell out. The question is when what happens in the economy and how aggressive they are in pricing,” said Hertzberg. “If I bet, they will be at the top of the list. It just has the right elements for the economy and our world.”
What can be done in the future
Perez, who has developed hundreds of properties in South Florida and experienced a massive condo crash during the Great Recession, isn’t concerned about the future of the new project.
“Yes, the market across the country has gone down, especially in luxury units, but we find that in the enclaves that we have, like Fisher Island, we still see a good level of interest from people who can buy the best,” he said. Perez.
Instead, he worries about the broader economy and the broader real estate market.
“Of course, it bothers me. Every day it bothers me. I wake up every day thinking about you know what’s going to happen in the economy,” said Perez. “We think that interest rates and inflation are high enough. We will have a rough, in my opinion, a year to a year and a half, two years. And we are ready to face the storm. It happens.”
If Perez gets $90 million for the penthouse, it will be the most expensive condo for sale in all of South Florida.